The Alchemy of Agreements: Examining India’s FTA’s in an Evolving Global Order

In order to appreciate the importance of the international trade to economic development, it is pertinent to note the observation of Joseph Stiglitz in his book titled "Globalisation and it’s discontents”. He notes that opening up international trade has helped several countries to grow more quickly than they would have otherwise done.1 In this context, it would also be opportune to note the remarks made by Pascal Lamy, the Director General of the WTO in August 2007. He mentioned that ‘trade opening and vanishing of many walls have the potential for expanding freedom, empowerment, democracy, innovation, social and cultural exchanges’.2

The recent developments in India, with the government seeking to open trade routes to the west, the change in the Indian attitude towards it’s trade partners has captured a lot of attention. In this context, it would be opportune to trace the Indian developments to 1947, when India gained independence, in the period following this the country sought to embrace protectionism with high import barriers.3 However, this narrative shifted to unveil a novel picture in 1991, under Manmohan Singh, the then Minister of Finance that opened the doors to a new liberal economy.4 Presently, the merchandise exports are valued at 451 billion US Dollars which is a significant increase from 314 billion US Dollars that had been calculated over a decade ago.

Between the years 2005 and 2015, India entered into a number of bilateral and other regional agreements trade agreements. The objective behind this was to further the Indian integration into a number of global value chains, increasing the access to foreign capital and technology. This had also helped broaden the exports of services and to construct new strategic geopolitical partnerships.5 In the period between 2015-2025 India had entered into a new age of it’s trade diplomacy that would focus on deeper, multi-faceted agreements that worked beyond the traditional concepts of reducing the tariffs. These agreements had been constituted with the objective of increasing India’s competitiveness in the world by connecting it to emerging clusters in services, technology and high value manufacturing.6

In the year 2025, the Free Trade Agreements became a critical part of the Indian geopolitical toolkit.7 During this time India had concluded new trade deals with the United Kingdom, Oman and New Zealand and was also a part of the negotiations in order to sign 12 other new agreements. These included the talks with the objective of reaching bilateral trade agreements with one of the largest export markets in the world, namely the European Union, which later materialised in the form of one of the most ambitious Free Trade Agreement (hereinafter referred to as FTA) which was signed on the 27^th of January 2026. India has also been in negotiations in order to update nearly eight existing agreements.8 According to the Ministry of Statistics and Programme Implementation as per the First Advance Estimates, India’s real GDP is projected to grow by 7.4% in the Financial Year 2025-26 while the nominal GDP is projected to increase at a pace of 8.0%.9

The change in the Indian Trade Partners

In the years following 2020, the Indian Trade agreements had noticed a significant shift in terms of the trade partners, scope and coverage. Before this period a significant number of India’s trade agreements were with the countries in South Asia, the Association for Southeast Asian Nations or as a part of the ‘Look East Policy’. Following some developments, in it’s bilateral relations India announced to enter into FTA’s with trusted trade partners and significant export markets based on India’s trade and geopolitical interests.10

Change in the Indian Trade Interests

India finalised the Comprehensive Economic Cooperation and Partnership agreement with Mauritius on 22^nd February 2021. Though the exports to Mauritius were limited this was a significant deal since it was a gateway to Africa.11 It should be understood that this agreement had been entered into with the objective of increasing the growth of a strong India- Africa Trade and investment corridor, by the way of leveraging the financial infrastructure that was established in Mauritius, the tax benefits and the regulatory setup. It also sought to encourage the Indian financial institutions, law firms and pharma companies that sought to enter into the African region.12

The first trade agreement that India entered into with a Middle Eastern country was the one with the UAE, this was critical since this was also a transshipment hub. This Comprehensive Economic Partnership Agreement (hereinafter referred to as CEPA) came into force in May 2022. This agreement is also critical to understand India’s trends of signing trade agreements since this CEPA was the first agreement where India covered topics such as digital Trade and government procurement. India was previously unwilling to cover these issues in the other agreements. It is should be understood that in this CEPA the UAE exempted duties on around 97.4% of it’s tariff lines while the duties on more than 80% of the Indian tariff lines had been waived by India.13 In the first year of the operation of this agreement the bilateral trade between the countries had increased from 72.9 billion US Dollars, in the year of April 2021- March 2022 to 84.5 billion US Dollars in the year April 2022- March 2023. This sought to represent around 16% year- on- year growth.14 The critical industries that gained an advantage from the CEPA were gems and jewellery, electrical equipment, automobiles, cosmetics, agricultural products and chemicals, especially the labour-intensive sectors.15

In the same time India had also started it’s discussions with Australia on phased trade agreements and the United Kingdom, which started with a smaller deal leading to a more comprehensive agreement. In this context, it is critical to analyse the surrounding geopolitical tensions, with the Chinese and Australian elections, the India- Australia Economic Cooperation and Trade Agreement which was in the nature of a mini deal was signed. This agreement with Australia was a landmark development since this was India’s first significant trade agreement that was entered into with a developed country in more than a decade, this was very critical in terms of both energy security and high value services trade. This agreement provided for the tariff free entry of more than 96% of the Indian exports and established a timeline for 100% access within 2026. There were concessions that were provided in the sectors of coal, rare earths, wine and agri-products while India also received a significant fillip to textile, chemical and engineering exports.16 This liberalisation that was provided by this agreement was also applicable to 135 services sub- sectors, special arrangements that were made for the STEM graduate visas and Working Holiday Maker Programmes. There were also some extra chapters that dealt with the aspects of double taxation, mutual recognition of professional qualifications and sanitary and phytosanitary alignment that worked towards the reduction of trade flows.

The India and the European Union’s Trade and Economic Partnership Agreement (hereinafter referred to as TEPA) that had been concluded on the 10^th of March 2024, sought to bring around 100 billion US Dollars in investment to India. This deal also provided India with duty free access to 99.6% of it’s exports, in return it sought to offer the EFTA with preferential access on 82.7% of the tariff lines. This deal also sought to link India with technology and precision that is required in the engineering value chains. The Swiss firms such as ABB, Novartis and Syngenta had made critical expansion announcements and India had also gained a critical entry point into the EU markets through Switzerland’s services and financial infrastructure. This accord has been prognosticated to increase the trade of the 18.7 billion US Dollars in the near future.17

However, around the same time the United Kingdom had decided to enter into a single comprehensive trade deal with India that was signed on the 6^th of May 2024. This was heralded to be one of the most comprehensive trade agreements that India had signed.18

In June 2022, India and the EU had started the negotiations with the European Union again, it is pertinent to note that the negotiations surrounding this trade agreement had been going on for the past three decades. However, in this context it is pertinent to note that one of the critical issues for the stakeholders will be climate change. The EU FTA’s usually include very strong chapters in the area of Trade and Sustainable Development, however the deal with India has a weaker provision.19 This deal is also gaining momentum with the specialists in trade that will likely notice the manner in which the FTA may or may not influence the position that India has at the WTO, especially in the context of the WTO Investment Facilitation for Development Agreement and at the upcoming WTO ministerial conference scheduled to take place from the 26^th to the 29^th of March 2026, in Yaounde, Cameroon.20 In the context of Sanitary and Phytosanitary measures in the agreement, the agreement has provisions on animal and plant health which are comprehensive and balanced and they thus include both the EU’s offensive and the defensive interests. The agreement provides for higher transparency and predictability for the trade of plant and animal products including fisheries and aquaculture products.21

Parallelly there were negotiations surrounding the Investment agreement and one for the geographic Indicators. Additionally, India also signed a trade agreement with New Zealand. This FTA is critical for India since India wants market access for agri-food, dairy products, education and clean tech when New Zealand aims for closer services cooperation and e-commerce connections.22

The Way Ahead

It should also be understood that higher tariffs are no longer able to protect the domestic industry and so the tariffs should be reduced in order to allow for the entry of the intermediate products and raw materials for more of the ‘Make in India’ initiatives. There are some sectors, for instance the alcoholic products, where one of the critical demands of the trade partners is to reduce the tariffs, in the instances such as these India should adopt an approach whereby it reduces the tariffs on the bulk and the intermediate goods immediately and would then reduce the tariffs in a phased manner in order to allow for proper reductions for the final products.

The trade negotiations must be focused on regulatory certainty and not only on regulatory cooperation. Though it is important to have some requirements for rules to be followed by the trade partners, this cannot be positioned in the form of a trade barrier. Though India should be keen to look out against any infringements of it’s trade policy interests domestically and internationally it should not have stringent regulations. In the context of exploring the area of digital trade, India should focus on signing separate agreements to that effect. Though this would lead to multiplicity of agreements, this could also ensure that the trade agreements are signed and effectuated immediately.

This noticeable shift in India’s FTAs with developed countries is part of a larger shift in the Indian global economic strategy, over the past few years. As part of this it has sought to leverage it’s own large market for better access to partner markets with transparent trading mechanisms. As mentioned above, in order for India to realise it’s objectives as growing as a trade partner some of the grassroot realities of the domestic industries have to be considered. In this context, one of the critical areas for India to develop it’s domestic regulations are through working on the customs procedures, these have been criticised to be very complex by some of the stakeholders of the industries. In the area of customs regulations, there are some issues that the Indian regulators must identify to accelerate India’s global trade. Firstly, the customs duty structure has to be rationalised in order to simplify the import compliance and to attract more foreign investment. Presently the imports that are brought into the country are subjected to multiple layers of duties and cesses which makes the entire process to be more expensive and costly. If India were to aim to improve the ease of doing business in the country, this form of layered tariff structure must be addressed and improved.

Secondly, one of the most critical issues that the country is facing presently is the issues of inverted duty structures in the customs schedule, especially in the instances where the intermediate inputs and the capital goods that are subjected to higher tariffs in comparison to the final goods. In this context, it should be noted that in the year 2023, half of India’s imports consisted of intermediate inputs, capital goods and raw materials that are subjected to tariff rates above 5%. This indicates the potential cost inefficiencies in the instances where the downstream industries utilise these inputs. As a guiding principle the intermediate goods in the customs schedules should be subjected to lower tariff rates in comparison to the finished goods to support cost effective manufacturing and greater integration into the global value chains.23

Thirdly, there must be increased focus on the customs procedures and port level delays that cause significant issues in the functioning of the supply chains and are also the reason behind affecting the  timely fulfilment of the export orders, this is an increasingly important factor that determines the competitiveness of a country in the global markets.24 Thus, in order for India to be able to achieve the targets that it has set for it’s exports and in order to establish itself as a strong player in the global value chains, the country has to adopt domestic regulations in the form of reforms to the import structures which would allow the county to access cost-efficient inputs. In this regard, it should be understood that the customs reforms are able to play a critical role by way of addressing the significant challenges such as the multiplicity of duties, inverted duty structures and delays in the clearance of customs. If the domestic reforms are designed and implemented effectively, these reforms to the customs framework will be able to position India effectively in the evolving global world and the global economy by providing a much-needed boost to the manufacturing sector.25

India is now moving past it’s reliance on the multilateral trade system towards a more regional and bilateral trade system. In this context, it would be pertinent to note that India should consider consolidating it’s interests in it’s bilateral relations to expedite the rewards of the trade partnerships. The shift that India has made in it’s approach to International Trade is critical to the development of the state in the volatile geopolitical landscape, however as mentioned above, these changes must be accompanied by forward-looking, timely domestic regulations for India to ascend to a dynamic trade and commerce stratosphere.

• 1The Law and Policy of the World Trade Organisation, Van Den Bossche and Zudoc.
• 2Ibid.
• 3https://www.economicsobservatory.com/how-is-indias-trade-landscape-shaping-up-for-the-future
• 4Ibid.
• 5https://www.thegeostrata.com/post/india-s-trade-agreements-past-present-futuren
• 6Ibid.
• 7https://www.iiss.org/online-analysis/online-analysis/2026/01/indias-renewed-focus-on-free-trade-agreements/
• 8https://www.iiss.org/online-analysis/online-analysis/2026/01/indias-renewed-focus-on-free-trade-agreements/
• 9https://www.ibef.org/economy/trade-and-external-sector
• 10https://www.hinrichfoundation.com/research/article/trade-governance/what-should-india-focus-on-in-its-next-trade-agreements
• 11Ibid.
• 12https://www.thegeostrata.com/post/india-s-trade-agreements-past-present-future
• 13https://www.thegeostrata.com/post/india-s-trade-agreements-past-present-future
• 14https://www.thegeostrata.com/post/india-s-trade-agreements-past-present-future
• 15Ibid.
• 16https://www.thegeostrata.com/post/india-s-trade-agreements-past-present-future
• 17Ibid.
• 18Ibid.
• 19https://www.orfonline.org/expert-speak/the-india-eu-fta-from-political-agreement-to-ratification-and-coming-into-force
• 20Ibid.
• 21https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india/eu-india-agreements/memo-eu-india-free-trade-agreement-chapter-chapter-summary_en#section4
• 22https://www.thegeostrata.com/post/india-s-trade-agreements-past-present-future
• 23https://www.hindustantimes.com/opinion/how-customs-reform-can-help-india-s-export-strategy-101769787369935.html
• 24https://www.hindustantimes.com/opinion/how-customs-reform-can-help-india-s-export-strategy-101769787369935.html
• 25Ibid.